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These pot stocks have gone gangbusters in 2018

It certainly has been an incredible start to the year for many of Australia’s leading pot stocks.

The decision by the Federal Government to allow medicinal cannabis exports has led to investors fighting to get hold of shares.

Such has been the demand that these pot stocks have gone gangbusters in the last five days.

Here’s why investors have been fighting to get hold of their respective shares:

The Auscann Group Holdings Ltd (ASX: AC8) share price started the year at 79 cents. At the time of writing the leading medicinal cannabis company’s shares are up an incredible 125% to $1.78. Due to its experienced management team, education program, and partnership with Canadian giant Canopy Growth Corp, it is arguably one of the best positioned pot stocks to profit from the change in regulations. However, its shares have rallied very strongly now and could come under pressure from profit-taking when momentum drops.

The Cann Group Ltd (ASX: CAN) share price has climbed 50% since the start of 2018. Like AusCann, I think Cann is well placed to profit from the changes to regulations due to its sizeable production facilities. Its shares landed on the ASX in May of last year at a listing price of 30 cents. At the time of writing its shares are changing hands at $4.15.

The Creso Pharma Ltd (ASX: CPH) share price has rallied 31% since this time last week. 2018 looks like it could be a big year for the cannabis company. As well as the benefits of these changes to regulations, Creso is potentially on the verge of generating meaningful revenues from its edibles range, animal health products, and its exposure to Canada’s soon-to-be-legalised recreational cannabis industry.

What next?

It does look as though 2018 is going to be a very exciting year for Australian pot stocks.

However, I do believe that current market valuations are beginning to get a little stretched, which could lead to a profit-taking sell-off in the not so distant future.

Furthermore, although many of the local pot stocks are cashed-up now, I wouldn’t be at all surprised if they took advantage of their share price rises to raise more capital.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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